Professional tax slabs

A professional tax slab is one band of a company's professional tax (PT) schedule: a range of monthly gross pay and the PT to deduct for it. You enter your state's schedule as a set of slabs once per payroll company. Every time a payroll run is calculated, the professional tax line of each employee's salary structure looks up the band that matches the employee's gross pay for the month and deducts that amount. The deduction then posts to the professional tax payable account and is deposited with a statutory challan.

Overview

Professional tax is the one statutory deduction, apart from salary TDS, that xMatix works out from a rule table rather than from the salary structure line's own value. A slab holds:

• the company it belongs to (Partner Account),
• the gross-pay band (From Amount to To Amount),
• the amount to deduct (Monthly PT) and, optionally, a different amount for February (February PT),
• reference details (State Code and Effective From) and an Is Active switch.

The slabs are a plain table. Nothing generates them, and no schedule for any state is supplied with the product, so you type in the bands from your state's current schedule.

When to use it

• Before the first payroll run of a company whose employees pay professional tax.
• When the state revises its schedule. Add the new bands and deactivate the old ones.
• When PT on a payslip looks wrong. The slab table is the first place to check, after the salary structure line.

How xMatix handles it

When you select Calculate on a payroll run, xMatix does the following for professional tax:

1. Loads the slabs once for the run, and picks each employee's state. It takes every slab whose Partner Account is the run's company and whose Is Active is not unticked (deleted slabs are ignored). For each employee it keeps only the slabs of their work state — the State Code on the address of the employee's Branch, or of the resource's default branch when the employee has none. A state with no slabs of its own uses the slabs with no State Code; an unknown state uses those too, or, when every slab belongs to one state, that state's. Effective From plays no part. An employee whose PT applicable is unticked pays no PT.
2. Works through each employee's salary structure lines in Sequence order. As it goes, it adds up the earning and reimbursement lines into a running gross, after any proration for loss-of-pay days.
3. Reaches the PT line. A structure line is resolved from the slabs only when its payroll component has Statutory Type PT and the line's Calculation Type is Slab. Any other PT line simply pays its own Value.
4. Matches the band. It looks for slabs where the running gross is at least From Amount (blank counts as 0) and at most To Amount (blank means no upper limit). If several slabs match, the one with the highest From Amount wins. If none matches, professional tax is 0, and no message is shown.
5. Chooses the amount. When the payroll period's End Date is in February, it uses February PT, or Monthly PT if February PT is blank. In any other month, it uses Monthly PT. The amount is rounded to two decimals.
6. Applies the line's own limits. A Min Amount or Max Amount on the structure line still raises or caps the result. If the PT component is marked Is Proratable, the amount is also reduced for loss-of-pay days.

The PT line is a deduction. It lowers net pay and adds to Total Deductions on the employee's row. When the run is posted, the amount is credited to the Payable GL account of the professional tax payroll component.

What the gross includes matters:

• Only lines before the PT line count. An earning with a higher Sequence than the PT line is not in the gross the band is matched against. Put the PT line after every earning.
• Payroll adjustments are not included. Adjustments, such as a bonus or arrears, are added after all structure lines, so they never move an employee into a higher band.
• Prorated pay is used. In a month with loss-of-pay days the gross is the reduced amount, so the employee may fall into a lower band.

Prerequisites

• The payroll company exists as one of your own companies (a partner account).
• A Payroll Component for professional tax with Component Type Deduction, Statutory Type PT and a Payable GL account for professional tax. See Payroll components.
• The salary structures carry a line for that component with Calculation Type Slab, placed after the earnings. See Salary structures.
• Your profile can open the Payroll Settings area and create Professional Tax Slab records (see Permissions).

Procedure

Step 1 — Open the slab list

Open the App Launcher, search for Payroll and select the app. Choose Settings, then under Statutory Compliance choose Professional Tax Slabs. The All Professional Tax Slab view lists every slab with its Name, Partner Account, State Code, From Amount, To Amount and Monthly PT.

Step 2 — Create one slab per band

Select New. The form has two parts:

1. At the top, choose the Partner Account, the company whose payroll uses this schedule. Only your own companies are listed. Type the State Code if you want to record the state.
2. Under Details, enter Monthly PT, the Effective From date, the From Amount and the To Amount of the band. Leave Is Active ticked.

Select Save. The slab gets a name from the PTS numbering series and opens on its record page. Repeat for each band of the schedule, including a band for the exempt range with Monthly PT 0 if you want the exemption on record. A gross that falls in no band also gives 0.

Enter the bands so they leave no gaps. Gross pay is worked out to the paisa, so bands of 0–10,000 and 10,001 upward leave 10,000.01 to 10,000.99 with no band. Either make each From Amount the previous To Amount plus 0.01, or leave To Amount blank on every band. Because the highest matching From Amount wins, open-ended bands still resolve to the right slab.

Step 3 — Add the February amount, if your state has one

February PT is not on the standard New or Edit form. An administrator first adds the field to the Professional Tax Slab create layout in the layout designer (see Design a form layout). Because Edit opens the same form, the field can then be filled on new and existing slabs. Enter the February amount on the band that needs it, and leave it blank where February is the same as other months.

Step 4 — Check the result on a run

Calculate a payroll run for a period of the same company. Open an employee's row and check the professional tax line against the band their gross falls in. If it is wrong, correct the slab or the structure line, and select Calculate again. Calculate replaces the previous pass, as long as the run has not been posted.

Step 5 — Revise the schedule

When the state changes its rates or bands:

1. Create the new bands with the new Effective From date, as in Step 2.
2. Open each old band, select Edit, untick Is Active and save.

Do both before you calculate the first run under the new schedule. The calculation does not compare Effective From with the period, so an old band left active competes with the new one, and the band with the higher From Amount wins.

Step 6 — Correct or remove a slab

Open the slab and select Edit to change any value, or Delete to remove it. A change affects only runs you calculate afterwards. A run that is already posted keeps its amounts. To deduct a difference, use a deduction adjustment linked to the professional tax component on a later period (see Payroll adjustments and loans). Prefer unticking Is Active to deleting, so the old schedule stays on record.

Fields

The record page shows Partner Account in the header, a Key Information panel (State Code, Effective From, Monthly PT) and an Amount Details panel (From Amount, To Amount).

Business rules

• One active schedule per state. Each employee is matched only against the bands of their work state, so a company can hold several states' schedules side by side. Within a state the band with the highest From Amount that contains the gross wins; Effective From is not read, so deactivate a replaced schedule.
• Bands are monthly gross bands. The slab has no basis other than monthly gross, and no condition on the employee's gender, age or category. A schedule charged half-yearly or on annual income has to be expressed as monthly amounts, or the PT line handled another way.
• February is decided by the period's End Date. A run with no payroll period never uses February PT.
• The structure line must say Slab. Calculation Type Slab on the payroll component itself does nothing. Only the structure line's Calculation Type counts.
• No match means zero. A gross below the lowest From Amount, above a closed top band or in a gap between bands gives 0 without a warning.
• Pt Applicable. Unticking PT applicable on the Employee record makes their PT 0. Blank or ticked means PT applies.
• Posting. The PT amount is credited to the component's Payable GL Account when the run posts. Depositing it is a separate, manual Statutory Challan with Statutory Type PT.

Example

A company runs payroll for its staff in one state. The state's schedule (illustrative figures) charges nothing up to 7,500 a month, 175 from 7,500.01 to 10,000, and 200 above 10,000, with 300 in February for the top band. The payroll administrator creates three slabs for the company, each with State Code ST and Effective From 1 April:

The Field Staff salary structure has Basic at Sequence 10, HRA at 20, Special Allowance at 30, PF Employee at 40 and Professional Tax (Statutory Type PT, Calculation Type Slab) at 50.

• In the January run, an employee with a gross of 50,000 matches the third band and has 200 deducted.
• In the February run, whose period ends on 28 February, the same employee has 300 deducted.
• A part-time employee with a January gross of 9,200 matches the second band and pays 175.

When posted, each run credits the professional tax amounts to Professional Tax Payable. The administrator records the month's deposit as a Statutory Challan of type PT.

Training

Practice exercise

In a sandbox company that already has a salary structure with a PT Slab line:

1. Create two slabs: 0–15,000 with Monthly PT 0, and 15,000.01 with To Amount blank and Monthly PT 200.
2. Create a payroll run for a non-February period and select Calculate.
3. Open an employee whose gross is above 15,000.

Expected result: the professional tax line shows 200. Now untick Is Active on the 200 slab and calculate again. The line shows 0, because no active band contains the gross.

Quick reference

• Path: Payroll → Settings → Statutory Compliance → Professional Tax Slabs.
• One slab per band; the band with the highest matching From Amount wins.
• Blank To Amount = no upper limit; avoid paisa gaps between bands.
• State Code selects the employee's schedule; Effective From is reference only. Deactivate old bands when revising.
• February PT applies when the period's End Date is in February.
• The PT structure line must have Calculation Type Slab and come after the earnings.
• No matching band = PT of 0, with no warning.
• Recalculate an unposted run after changing slabs.

Permissions

Access follows the Professional Tax Slab entity permissions in each security profile:

• See, create, edit and delete. These need read, create, edit and delete on Professional Tax Slab. The seeded System Admin, Standard User and Sales Executive profiles have full access.
• Reach the list. The slab list is in the Payroll Settings area. Of the seeded profiles, only System Admin has that settings app, so other users find slabs only through the App Launcher search if their profile can read the entity.
• Clone is granted to the same three profiles but is not on the slab's record page.

Because slab amounts change every employee's net pay, restrict create, edit and delete to payroll administrators in your own profiles.

Configuration

The seeded Payroll Run Control dashboard includes a Professional Tax Slabs table that summarises the slabs by Effective From.

Common problems

Professional tax is 0 for everyone

Check these in order:

• The structure line's Calculation Type is Slab, and its payroll component has Statutory Type exactly PT.
• The slabs' Partner Account is the run's company.
• The slabs are active.
• The employees' gross is inside a band. Watch for paisa gaps between bands and a closed top band.

Correct the cause and select Calculate again.

Professional tax is the line's fixed value, not the slab amount

The line is not resolved from the slabs. Either its Calculation Type is not Slab, or its component's Statutory Type is not PT. See Payroll components.

An employee is charged a lower band than their salary suggests

The band is matched against the gross worked out by the lines before the PT line. Earnings placed after it in Sequence, payroll adjustments and pay lost to loss-of-pay days are not in that gross. Move the PT line after all earnings.

The new rates did not apply after a revision

The old bands are still active. Effective From is not compared with the period, so both schedules compete and the highest matching From Amount wins. Untick Is Active on the old bands and calculate the run again.

February deducted the normal amount

February PT is blank on the matching band, or the run's payroll period does not end in February. Check the period's End Date (see Payroll periods), add February PT to the band, and recalculate.

Employees in two states get the same PT

The run uses the state code on the address of each employee's branch. Check that the branches have addresses with the right state code, that the slabs carry the same two-digit codes, and that the employees' Branch (or their resource's default branch) is filled in.

Common questions

Do I need slabs if my employees pay no professional tax?

No. Leave the PT line off the salary structure, and no slab is read. If some employees are exempt by salary, a band with Monthly PT 0 records that clearly. A gross that falls in no band also gives 0, but without anything on record to explain why.

Can one company hold schedules for several states?

Yes. Give each state's bands its two-digit GST State Code. Each employee is charged from the bands of the state on their branch's address, never from another state's.

Does professional tax reduce the TDS projection?

No. The monthly TDS projection works from projected salary and verified declarations only, and treats the professional-tax deduction as nil. See Monthly TDS projections.

Can I change slabs after a run is posted?

Yes, but the posted run keeps the amounts it was calculated with, and it cannot be recalculated. Changes apply to runs you calculate afterwards. If an employee was under- or over-charged, put the difference on a later period as a payroll adjustment linked to the professional tax component.

Related topics

• Statutory deductions and challans
• Salary structures
• Payroll components
• Running payroll
• Payroll periods
• Professional Tax Slab reference